JAPANESE MORNING PRESS HIGHLIGHTS 06/02/09

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 06/02/09

Index:
1) Top headlines
2) Editorials
3) Prime Minister's daily schedule (Nikkei)

Visit of Deputy Secretary Steinberg:
4) U.S., Japan agree not to recognize North Korea as a nuclear power
(Yomiuri)
5) Deputy Secretary Steinberg, Vice Foreign Minister Yabunaka agree
to pressure North Korea to denuclearize (Nikkei)
6) Foreign Minister Nakasone would like to see a review of the
policy dealing with North Korea (Mainichi)
7) Yabunaka says new approach needed in North Korea policy (Asahi)

8) U.S. has shifted focus of North Korea policy toward pressure
tactics, with Treasury official accompanying Steinberg delegation to
Japan (Asahi)
9) In meeting with Deputy Secretary Steinberg, Democratic Party of
Japan President Hatoyama makes pitch for a future DPJ administration
(Nikkei)

Defense and security affairs:
10) Vice defense minister restates Japan's request of U.S. to share
information on the F-22 (Mainichi)
11) Liberal Democratic Party (LDP) seeks end to defense budget cuts,
wants new build up plan to state so (Sankei)
12) Chief Cabinet Secretary Kawamura denies existence of "secret
pact" between U.S. and Japan allowing nuclear weapons into Japan
(Mainichi)
13) Government to decide today basic action plan for military use of
outer space (Akahata)

Politics:
14) August Lower House election now likely (Mainichi)
15) DPJ in battle formation to confront the ruling parties this
summer in run-up to the Lower House election (Mainichi)
16) Ruling and opposition camps are gearing up strategies to appeal
to public in upcoming election campaign (Tokyo Shimbun)

Articles:

1) TOP HEADLINES

Asahi: Mainichi: Yomiuri: Nikkei: Sankei: Tokyo Shimbun: Akahata:
GM files for bankruptcy with 16 trillion yen in debts

2) EDITORIALS

Asahi:
(1) GM files for bankruptcy: Occasion for reform of automobile
civilization
(2) Diet session extended extensively: Do not continue to avoid Diet
dissolution

Mainichi:
(1) GM to be nationalized: Reconstruction is a long way off
(2) Disapproval of construction of Onahama thermal power plant:
Environment assessment worked

Yomiuri:
(1) GM goes under: Key to reconstruction is to manufacture cars that
sell

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(2) Designation of U.S. ambassador to Japan: First step toward
building new relationship with Obama administration

Nikkei:
(1) GM files for bankruptcy: Giant company neglects self- reform

Sankei:
(1) Nationalization of GM: Reconstruction free of protectionism
(2) Mid-term goal to cut global warming gasses: "Laugh, if you must"
spirit needed in international talks

Tokyo Shimbun:
(1) Diet session extended for 55 days: Set election day immediately
(2) Nationalization of GM: Can it survive in a "green society"?

Akahata:
(1) Cut in number of seats in proportional representation
constituencies in Upper House

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, June 1

NIKKEI (Page 2) (Full)
June 2, 2009

07:50 Took a walk around his official residence.
10:30 Met the Emperor and Empress at the entrance of the Japan
Academy Hall in Ueno Park. Attended an award ceremony.
12:03 Sent the Emperor and Empress off.
13:28 Met at the Kantei with Secretary General Hosoda and Diet
Affairs Committee Chairman Oshima, with Chief Cabinet Secretary
Kawamura present. Kawamura stayed behind.
15:01 Attended an LDP executive meeting in the Diet.
15:25 Met Kawamura at the Kantei. Later, met New Komeito President
Ota. Then met Hosoda and New Komeito Secretary General Kitagawa,
with Kawamura.
18:25 Attended a farewelling for International Criminal Court Judge
Saiga at the Foreign Ministry's auditorium.
18:40 Dined with his secretaries in a reception hall at the Hotel
New Otani.
21:22 Returned to his official residence.

4) Japan, U.S. agree not to tolerate North Korea's possession of
nuclear weapons, will consider review of six-party talks

YOMIURI (Page 2) (Full)
June 2, 2009

Following North Korea's latest nuclear test, the Japanese and U.S.
governments held an emergency high-level meeting at the Foreign
Ministry yesterday, in which participants agreed that they could not
tolerate North Korea's possession of nuclear weapons. They also
shared the need to review the six-party talks on North Korea's
nuclear program. The Japanese government takes the view that the
framework of the talks should be maintained, but it intends to
review with the U.S. and other countries ways of proceeding with the
discussion, past agreements, and other details to explore a new
approach to create a productive outcome.

The meeting was attended by Vice Foreign Minister Mitoji Yabunaka
and senior officials from the Defense Ministry, the Finance Ministry

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and the Cabinet Secretariat from the Japanese side. Attended from
the U.S. were Deputy Secretary of State James Steinberg, Special
Representative for North Korea Policy Stephen Bosworth, and senior
officials of the Treasury Department, the Defense Department and the
National Security Council. Regarding the six-party talks, Yabunaka
said in a press conference after the meeting: "It is necessary to
consider their future options. While examining to what extent the
approach taken so far has proved successful, we should consider a
new approach based on this reflection."

In their talks, Japanese and U.S. officials also agreed that Japan,
the U.S. and South Korea should cooperate in mapping out measures
against North Korea. Pyongyang has announced that it would fire a
long-range ballistic missile. In reaction, the U.S. reiterated its
commitment to defending Japan from the North Korean threat.

5) Japan-U.S. vice minister-level talks agree to apply pressure for
denuclearization of North Korea, review of Six-Party Talks

NIKKEI (Page 2) (Full)
June 2, 2009

The governments of Japan and the United States held a vice
minister-level meeting on June 1 at the Foreign Ministry to discuss
their response to North Korea's second nuclear test. In the meeting,
the two sides shared the view that they will absolutely not allow
North Korea to possess nuclear weapons. They also confirmed a policy
course to take "effective measures" for the denuclearization of
North Korea at such venues as the UN Security Council and the
Six-Party Talks. At a press conference after the meeting, Vice
Foreign Minister Mitoji Yabunaka pointed out the need for new
measures, including a review of the modalities of the Six-Party
Talks.

High-ranking government officials of Japan and the United States met
for the first time after North Korea's nuclear test. U.S. Deputy
Secretary of State James Steinberg told reporters after the meeting,
"We are discussing what measures we can take at the UN Security
Council and other venues."

Yabunaka also said, "While we will examine to what extent the
approach that has been taken until now has proven effective, a new
approach should be considered based on this reflection." He revealed
a plan to consider a system that can ratchet up pressure on North
Korea based on the fact that the denuclearization process of the
Six-Party Talks is deadlocked.

In the meeting, the Japanese side asked for the cooperation of the
United States for the settlement of the abduction issue, and the
U.S. side showed an understanding.

6) Steinberg announces to Nakasone a plan to review
dialogue-oriented policy toward North Korea

MAINICHI (Page 2) (Full)
June 2, 2009

Naoyuki Inukai

The governments of Japan and the United States held their vice
minister-level talks yesterday in Tokyo to discuss their responses
to North Korea that had conducted another nuclear test. It has

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become clear that U.S. Deputy Secretary of State James Steinberg,
who attended the vice minister-level talks, indicated in his meeting
with Foreign Minister Hirofumi Nakasone that the United States would
review its dialogue-oriented policy toward the North. Steinberg
said, "Things will not go in the same way as before, although we
will keep dialogue as our leverage in dealing with North Korea."
Steinberg also said in the vice minister-level talks, "Things will
not go as before."

He is believed to have expressed a view that the United States will
ratchet up pressure on the North based on the fact that the Obama
administration's dialogue policy course failed to prevent Pyongyang
from conducting the nuclear test and launching ballistic missiles.

In his meeting with Nakasone, Steinberg emphatically said, "The same
mistake must not be repeated." Nakasone welcomed Steinberg's comment
on applying greater pressure on North Korea, saying, "That is the
direction we also want."

The vice minister-level talks were attended by Administrative
Vice-Foreign Minister Mitoji Yabunaka, Steinberg and others. Based
on the bitter lesson learned from the Six-Party Talks that the
framework has not functioned effectively in addressing the North
Korean nuclear issue, the two sides agreed in the talks to discuss a
new approach with countries concerned. The new approach seems to
mean asking China, the chair of the Six-Party Talks, to exert
influence. The two sides confirmed a policy course to cooperate for
the adoption of a strong UN Security Council resolution, saying they
absolutely cannot allow North Korea to possess nuclear weapons. The
Japanese side indicated that the abduction issue is also extremely
important.

7) Vice Minister of Foreign Affairs Yabunaka calls for "new
approach"

ASAHI (Page 5) (Full)
June 2, 2009

Toru Higashioka

In light of the recent North Korean nuclear test, Japanese and U.S.
officials lead by Vice Minister of Foreign Affairs Mitoji Yabunaka
and Deputy Secretary of State James Steinberg exchanged views on
future policy toward the DPRK at the Ministry of Foreign Affairs in
Tokyo on June 1. After the meeting, Yabunaka told a news conference
that the Six-Party Talks "continues to be an effective framework,"
but indicated that "a new approach based on lessons learned" is
necessary. Yabunaka wondered "how effective the approach so far had
been," since it was unable to stop the missile launches and the
nuclear test, indicating his assessment that past policy had not
been fully successful.

On the other hand, Steinberg told reporters after the meeting that,
"We focused on developing a common strategy." The U.S. delegation
also met Democratic Party of Japan (DPJ) President Yukio Hatoyama.
According to the DPJ, Steinberg said that "(the U.S.) will make
serious efforts to persuade China," indicating his belief that the
response of China, which has close economic ties with the DPRK,
holds the key.

8) U.S. shifting to pressure tactic in dealing with North Korea;
Delegation includes Treasury official

TOKYO 00001230 005 OF 011



ASAHI (Page 5) (Full)
June 2, 2009

A U.S. government delegation led by Deputy Secretary of State James
Steinberg is in Japan for discussions with the Japanese government
on June 1 on how to respond to North Korea's nuclear test. The
lineup of the delegation, which consists of senior officials in
charge of foreign, military, and financial affairs, reflects the
Obama administration's strong determination to "contain North Korea
by all possible means" (State Department source). It is very likely
that this may become the turning point for the U.S. government,
which has advocated a "dialogue" with North Korea, to shift to
"pressure" tactics.

After his meeting with Japanese officials on the afternoon of June
1, Steinberg emphasized to reporters the need to apply pressure on
North Korea: "We need to make North Korea understand that it has to
reverse its course."

It is noteworthy that Under Secretary of the Treasury Stuart Levey
is a member of the delegation. He was responsible for the U.S.
financial sanctions on a Macau bank, to which the DPRK had reacted
fiercely. Financial sanctions are included in the sanction
resolution currently being deliberated at the UN Security Council,
and Levey's presence in the delegation is an indication of the U.S.
stance of applying financial pressure.

On the other hand, Stephen Bosworth, special envoy for North Korea
policy who is the coordinating officer for the U.S. government's
DPRK policy and chief liaison with other countries, is a mere member
of the delegation. There are growing moves to modify the North Korea
policy led by Bosworth, who has called for "dialogue and patience,"
after the nuclear test. At the discussions on June 1, Bosworth
himself said that U.S. policy "is not one-sided dialogue" (Ministry
of Foreign Affairs source). The reason why the U.S. government has
begun to shift to a tough stance is because North Korea's nuclear
test is regarded as the "first direct challenge" (New York Times) to
President Barack Obama, who is campaigning for "a world without
nuclear weapons."

North Korea has repeatedly stressed that it is a "nuclear power."
After the second nuclear test, it is now widely believed that the
DPRK does not intend to "denuclearize" - which is the goal of the
Six-Party Talks - but wants to "go into nuclear arms reduction talks
as a nuclear power" (Victor Cha, former director of Asian Affairs,
National Security Council).

Nuclear proliferation by North Korea has also become a real
possibility. There is an opinion that, "North Korea's plutonium and
missile technology and Iran's centrifuges complement each other. The
collaboration of the two will be fatal." (Stanford University
Professor Siegfried Hecker) Within the State Department, there is
also opinion that being soft on North Korea will have a ripple
effect on the Iranian nuclear issue, which the U.S. regards as more
serious.

The U.S. government reckons that "North Korea will have to return to
the Six-Party Talks sooner or later." (Gary Samore, White House
coordinator for arms control and weapons of mass destruction and
terrorism) It intends to maintain the Six-Party Talks framework.
However, the U.S. undeniably cannot project into the future. It is

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believed that it may attempt to find a window for dialogue using the
issue of the two female American journalists now in custody in North
Korea.

9) Hatoyama to U.S. Deputy Secretary of State: Democratic
governments in both Japan and the United States

NIKKEI (Page 2) (Full)
June 2, 2009

Democratic Party of Japan President Yukio Hatoyama met U.S. Deputy
Secretary of State James Steinberg at the party headquarters on June

1. He said: "Let us take on the big challenge posed by various
issues with Democratic governments both in Japan and the United
States," calling for strengthening bilateral relations while also
indicating a strong motivation toward a change of government.

On the North Korea issue, Hatoyama pointed out that, "It is
important to draft a UN resolution incorporating additional
sanctions and draw China into cooperating." Steinberg responded
with: "North Korea will probably understand that even with a change
of government in Japan, the response of Japan and the United States
will remain unchanged," paying lip service to Hatoyama.

10) Japan again asks U.S. for F-22 data

MAINICHI (Page 5) (Full)
June 2, 2009

Administrative Vice Defense Minister Kohei Masuda yesterday met with
visiting U.S. Assistant Secretary of Defense for Asian and Pacific
Security Affairs Gregson at the Defense Ministry. In the meeting,
Masuda referred to the F-22, a state-of-the-art stealth fighter
developed by the United States, as a likely candidate in the process
of selecting the follow-on mainstay fighter (FX) for the Air
Self-Defense Force. In this connection, Masuda again made a request
to provide such data as the F-22's performance and equipment.
Gregson went no further than to explain that the F-22 has been
embargoed by the U.S. Congress.

In addition, Masuda and Gregson also confirmed that Japan and the
United States would steadily realign U.S. forces in Japan, based on
a bilateral agreement reached in 2006 on such measures as relocating
the U.S. Marine Corps' Futenma Air Station in Ginowan, Okinawa
Prefecture, to a coastal area of Camp Schwab in the island
prefecture's northern coastal city of Nago.

11) LDP calls for retracting defense spending cuts

SANKEI (Page 2) (Abridged)
June 6, 2009

The ruling Liberal Democratic Party yesterday revealed its final
draft proposal for the government's national defense program
guidelines to be revised late this year. The final draft proposal
makes a request to the government, insisting that the government
should modify its draft revisions to the guidelines. Specifically,
the LDP, in its finalized proposal, insists that the government
should retract its policy of cutting back on Japan's defense
spending and defense capabilities. In addition, the LDP policy
proposal paper also says the government should maintain and expand
its defense spending and the Self-Defense Forces' manning level.

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What lies behind this is the worsening of the security environment
surrounding Japan, as seen from North Korea's repeated nuclear tests
and ballistic missile launches, China's projection of its military
power with plans to build flattops, and Russia's recovery of
military power. In addition, the SDF has been tasked with an
increasing number of missions for international peace cooperation.
"The SDF cannot fully meet the needs with its decreasing budget and
manpower," an LDP lawmaker on national defense said.

The final draft, titled "Policy Proposal on the New National Defense
Program Guidelines," was created by the LDP Defense Division's
defense policy subcommittee (chaired by Hiroshi Imazu) with
modifications to its May 26 original draft. It also calls for the
government to think twice about its "big-boned" economic and
financial policy guidelines' defense spending cuts. The LDP will
shortly make a formal decision on its finalized policy proposal and
will present its policy proposal paper to the government.

In concrete terms, the LDP policy proposal paper specifies the need
for Japan to "ensure air and sea supremacy" against Chinese forces
in the sphere ranging from areas in the neighborhood of the Nansei
Shoto islands, or Japan's southwestern archipelago of islands, to
areas down to Guam.

The original draft proposal touched on the advisability of acquiring
the capability of striking enemy bases. Within the LDP, however,
there are also cautious arguments concerning this enemy base strike
option. So the final draft sought their understanding, with an
additional description saying acquiring this capability will
"establish stronger bilateral cooperative arrangements between Japan
and the United States."

12) Kawamura denies 'secret deal' on nuke introduction

MAINICHI (Page 5) (Abridged)
June 2, 2009

Chief Cabinet Secretary Takeo Kawamura, meeting the press yesterday,
denied that Japan and the United States had concluded a secret
agreement tacitly allowing "nuclear introduction" into Japan. In
this connection, some of the media reported yesterday that the
Foreign Ministry had reportedly controlled the secret deal concluded
between the Japanese and U.S. governments when the Japan-U.S.
Security Treaty was revised in 1960. Kawamura said, "Since there
have been no prior consultations for nuclear introduction, I have no
doubt at all that there was no nuclear introduction." The bilateral
security treaty stipulates that the U.S. government is to propose
consultations with the Japanese government before bringing in
nuclear weapons into Japan. Meanwhile, Administrative Vice Foreign
Minister Mitoji Yabunaka also denied the secret pact in a press
conference yesterday, saying, "The successive prime ministers and
foreign ministers have explained that there was no such secret
agreement."

13) Government to decide on basic space program today to shift
course to use space for military purposes

AKAHATA (Page 3) (Full)
June 2, 2009

The government's Strategic Headquarters for Space Development,
headed by Prime Minister Taro Aso, will hold a plenary session today

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to make a formal decision on the basic space program now being
readied. The expert panel-drafted program that defines for the first
time the use of military satellites by the Self-Defense Forces (SDF)
as part of the nation's state strategy is likely to be approved (by
the government). The program is designed to allow the country to set
foot on the dangerous path of military expansion, completely
reversing the modality of Japan's development and use of space which
has been limited to the nonmilitary field.

The basic program is designed to shift Japan's emphasis from
research and development in the space area to the use of space. The
program also lists six basic directions, such as reinforcing
security by using outer space and nurturing strategic industries.

Many people expressed negative views on the basic program,
formulated by April by the expert panel. For instance, one said, "If
this program remains as is, chances are high that Japan will play a
role of intensifying the global military expansion race in outer
space." Another expressed opposition, "I am strongly opposed to
building a system that would eventually allow a country with Article
9 to intimidate other countries by using force."

14) Lower House election in August now likely, with decision to
extend Diet session until July 28

MAINICHI (Page 1) (Full)
June 2, 2009

Prime Minister Taro Aso decided in a meeting with New Komeito
President Akihiro Ota at the Prime Minister's Office yesterday to
extend the current Diet session, which is due to end on June 3, for
55 days until July 28 in order to ensure the passage of key bills
now on the Diet table. The bills include an antipiracy bill and the
fiscal 2009 supplementary budget and related bills. The extension
plan is likely to be approved in a House of Representatives plenary
session today. Under this plan, it will be possible to hold a Lower
House election on Sept. 6, just before the Lower House members' term
runs out. An increasing number of ruling party members now expect
the election to take place sometime in or after August.

Three voting day options are being discussed. The most likely plan
is to dissolve the Diet in mid or late July, in order to enact a
bill revising the Law on Special Measures concerning Taxation, which
is one of the extra budget-related bills and has already cleared the
Lower House, and the antipiracy bill. Under this scenario, it will
be possible to avoid the general election and the Tokyo metropolitan
assembly election from being held on the same day or dates close to
each other, in accordance with the New Komeito's desire. The Tokyo
election is scheduled for July 12. If this plan is adopted, the
voting day will be Aug. 2 or 9.

There is speculation that Aso aims to face the election after
obtaining diplomatic results over the Northern Territories and other
issues in the July 8-10 Group of Eight (G-8) Summit in Italy. But
the annual Peace Memorial Ceremony for the atomic bomb victims is
scheduled for Aug. 9 in Nagasaki. An ex-cabinet minister commented:
"Since the election campaign period will cover the day of the
memorial ceremony in Hiroshima, this option is inconceivable."

The next option is to dissolve the Lower House on July 28, when the
Diet session is to recess. Under this option, the election will be
set for Aug. 30 or Sept. 6. In this case, it will make little

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difference in either the case of a general election resulting from
Diet dissolution or one resulting from the natural expiration of the
Lower House members' term. It is also conceivable that calls for
dumping Aso will grow in the Liberal Democratic Party prior to the
expiration of his term of office if public support of his government
drops further.

There is also the possibility of Aso dissolving the Lower House in
June if the Democratic Party of Japan boycotts deliberations on the
budget-related bills. But the New Komeito wants to avoid holding the
general election and the Tokyo election on the same day

15) DPJ getting ready to fight Lower House election

MAINICHI (Page 5) (Full)
June 2, 2009

The government and ruling parties have decided to extend the current
Diet session until July 28. In this regard, Ichiro Ozawa, a deputy
president of the main opposition Democratic Party of Japan (DPJ),
said: "It is certain that the next general election for the House of
Representatives will be held by the end of August." The DPJ,
therefore, has started preparing for the next Lower House election.
With the political situation following the election in mind, the
largest opposition party is making efforts to build good relations
with economic organizations. DPJ President Yukio Hatoyama and
Secretary General Katsuya Okada are moving their support for their
party's candidates nationwide into full gear.

Hatoyama told reporters yesterday at party headquarters: "Such
(lengthy) extension is not necessary. I think (the prime minister)
probably doesn't want to dissolve the Lower House." He criticized
Prime Minister Taro Aso's stance of delaying the dissolution of the
Lower House.

Hatoyama, Okada and DPJ lawmakers responsible for policy making
attended a meeting yesterday hosted by Japan Business Federation
(JBF or Nippon Keidanren) Chairman Fujio Mitarai. The JBF held the
session to discuss policies with the DPJ. The JBF side expressed
concern that the DPJ's bill amending the Worker Dispatch Law would
significantly hamper employment opportunities. Osamu Fujimura, the
DPJ's shadow minister of health, labor and welfare, elaborated on a
cautious view, saying: "I think our party does not necessarily want
to pass the bill during the ongoing Diet session." Asked about a
bill the DPJ submitted to the Lower House yesterday afternoon to
revise the Political Funds Control, which includes a complete ban on
corporate donations in three years, Policy Research Committee
Chairman Masayuki Naoshima explained: "After corporate donations are
prohibited, we will collect donations from individuals." He also
said: "We ask for your support for the three-year grace period."

Hatoyama and Okada set off on a stumping tour on May 30 and 31. They
energetically ran around the Tokyo Metropolitan area. Hatoyama is
expected to visit Chiba City this week to give a speech to support a
candidate running in the Chiba mayoral election (on June 14). The
DPJ aims to consolidate its footing in large cities by winning the
Chiba mayoral election, following the victory of Nagoya and Saitama
mayoral races. Appearing on a BS11 digital program yesterday, DPJ
Diet Affairs Committee Chairman Kenji Yamaoka said: "If we win the
Chiba mayoral election and the Tokyo Metropolitan Assembly election,
the power to remove Aso from office will emerge."


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Ozawa will spent most of this week stumping in the Kyushu region. He
plans to travel to isolated islands and mountain areas.

Deputy President Naoto Kan will visit Britain on June 6-10. In order
to give substance to the DPJ's administrative concept, he will
conduct field research there focused on relations between the
bureaucracy and cabinet. He told the press corps yesterday at party
headquarters: "We will change Japan by replacing the cabinet. We
want to show the public the meaning of a DPJ-led government."

16) Diet extended until July 28: Final battle toward Lower House
dissolution

TOKYO SHIMBUN (Page 2) (Full)
June 2, 2009

Ruling parties pin hopes on economic stimulus package producing
results

The Aso administration on June 1 decided to extend the Diet session
until July 28. Prime Minister Taro Aso intends to dissolve the Lower
House during the extended Diet session. The ruling parties will
enter a battle on the eve of Lower House dissolution in an effort to
turn the tide of the upcoming general election in its favor.

The ruling parties are pinning hopes on four sets of economic
stimulus measures, which the government adopted, producing effects,
and boosting cabinet support ratings.

Fixed-sum cash handouts will be delivered to residents in urban
areas, starting this month. Special subsidies designed to revitalize
local regions will also be handed out after local assemblies pass
their acceptance.

An eco-point system, under which consumers get points when they
purchase environment-friendly electronic home appliances and can
exchange them for commodities or services will start in August.
Highway tolls will again be discounted to 1,000 yen during the obon
holidays. The ruling parties are really hoping that the economy will
turn around with the stimulus packages produce results from now.

If that is the case, it is only natural for them to calculate that
the longer the pre-election period is, the higher cabinet support
ratings will rise, as Liberal Democratic Party Election Committee
Vice Chairman Yoshihide Suga put it. However, whether the economy
puts on the recovery track is unclear.

On the contrary, the prime minister once again went astray over
reneging on the division of the Ministry of Health, Labor and
Welfare, dealing a blow to the ruling parties.

Furthermore, ruling party-affiliated candidates are expected to have
an uphill fight in the Chiba City mayoral election on the 14th and
the Tokyo Metropolitan Assembly election on July 12. If the ruling
parties suffer a deep setback in those elections, the mood in the
ruling parties would worsen.

DPJ intends to drive mood for Lower House dissolution through speedy
deliberations

Referring to bills related to the fiscal 2009 extra budget,
Democratic Party of Japan (DPJ) President Yukio Hatoyama repeatedly

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stressed, "The DPJ will not adopt a strategy of prolonging
deliberations." He also criticized the substantial extension of the
Diet session, noting, "It was not necessary to extend the session
that much."

That is because in the event the DPJ delays deliberations on bills
related to the extra budget, which include emergency economic
measures, it would draw criticism from the public. The party also
intends to bring about Lower House dissolution at the earliest
possible date.

A certain senior official pointed out, "There is nothing much to do
in the extended Diet session. I wonder what the prime minister is
going to do, once the related bills pass the Diet." This official is
envisaging a strategy of creating a mood for dissolving the Lower
House, by creating political vacuum through the prompt handling of
pending issues.

If the prime minister does not decide to dissolve the Diet soon, the
DPJ plans to attack him, with Hatoyama saying: "(The prime minister)
has extended the Diet, just because he did not want to dissolve the
Lower House. He cannot call an election on his own."

In the meantime, the DPJ is steadily making preparations, including
the drafting of a manifesto and holding debate on a power shift,
with the aim of realizing a power transfer in the upcoming Lower
House election.

In order to give impetus to the Lower House election, it will do its
utmost to win the Chiba City mayoral election and the Tokyo
Metropolitan Assembly election.

ZUMWALT